The Data Vault: P2P lending

Rick Watkin, chief executive at MCI Club and MortgageKeeper, crunches the numbers to bring you the key market trends


Welcome to our monthly review of the levels of business completed by the FCA’s directly authorised brokers. Before we look at the details for March, I would like to share my thoughts on the growing trend of peer-to-peer lending.

I would like to think that we are well known for providing systems such as MortgageKeeper CRM. However, you may not be aware that we also supply some IT solutions, including lending and P2P platforms.

Our P2P platforms are used by well-known companies such as Wellesley & Co, which I understand is now the fastest-growing P2P firm in the UK. 

But what is surprising is the growing number of enquiries for this platform and, more interestingly, the markets in which they will be used.

It goes without saying that I would not give away business plans and ideas belonging to our customers. However, to assist me in predicting the possible UK market trend, I decided to do some research on the P2P market in the United States.

The US market is more advanced than the UK’s and some of the businesses in operation are a real eye-opener. 

“An example would be useful, Rick!” I hear you all cry. 

Well, there are many – but one P2P lender in the US uses a platform solely to raise funding for student loans. 

I hear you all saying: “That can’t possibly be a big enough market.” Well, it may surprise you to learn (and it did me) that the lender in question has taken more than $1bn (£674m) for this purpose alone.

We all know that P2P can be used to purchase commercial and buy-to-let properties but why cannot someone use it, or a crowdfunding site, to borrow money in order to purchase their main residence?

Let us be honest: UK interest rates for savers are very low and, as I have been saying for years, they will remain low until the Government gets the deficit under control. So why cannot someone who wants to buy a property, who has a great credit file and a big deposit, and who is employed in a stable job advertise themselves on such a platform?

As we all know, the Financial Conduct Authority controls regulated activity in the UK, and acting as a lender without the correct permissions is a serious offence. But can the FCA actually prevent someone from asking to borrow money from someone else? Also, is it an offence to lend money privately and to have this loan secured on residential property? Send your answers on a postcard, please. 

Well, this started me wondering whether such a platform could pose a threat to UK banks and whether the FCA would ever allow P2P to be used in connection with residential properties. Then it dawned on me: is that not how the UK’s building societies began?

Let us look at the mortgage completions for March. 

We noticed a dip in the number of completions for all of the top three: Halifax, Nationwide and Woolwich. The Halifax has had a 19 per cent dip in the number of completed mortgages on the MortgageKeeper platform and, although Nationwide also saw a 10 per cent drop, this has helped it to regain the top spot.

There was an overall fall in the number of completions in March, from £432m to £402m. 

Against this overall trend, both Natwest and Santander enjoyed good growth above the market average, with Natwest growing by 23 per cent.